Caught in the crossfire, Palau’s tourism suffers

China has of late last year banned tour groups to the idyllic tropical archipelago, branding it as an illegal destination due to its lack of diplomatic status.

Caught in an escalating diplomatic tug-of-war between China and Taiwan, the tiny Pacific nation of Palau is showing signs of suffering with vacant hotel rooms, idle tour boats and shuttered travel agencies.

China has of late last year banned tour groups to the idyllic tropical archipelago, branding it as an illegal destination due to its lack of diplomatic status.

Palau is one of Taipei’s 18 remaining allies worldwide and is under pressure to switch allegiances, officials and business people there say, Reuters reported.

In the commercial centre of Koror, hotel blocks and restaurants stand empty, travel agencies are boarded and boats which take tourists to Palau's green, mushroom shaped Rock Islands are docked at the piers.

“There is an ongoing discussion about China weaponising tourism,” said Jeffrey Barabe, owner of Palau Central Hotel and Palau Carolines Resort in Koror.

Prior to the ban, Chinese tourists accounted for about half the visitors to Palau. Of the 122,000 visitors in 2017, 55,000 were from China and 9,000 from Taiwan, official data showed.

The steep decline has prompted charter airline Palau Pacific Airways to announce in July it would terminate flights to China, four hours away, from the end of this month. The Taiwanese-controlled airline has since experienced a 50% fall in bookings since the China restrictions began.

This move is similar to the one China used last year when it halted tours to South Korea after Seoul installed a controversial US missile defence system.

Meanwhile, Palau president Tommy Remengesau Jr. said there had been no official communication from Beijing on the tourism restrictions.

“It is not a secret that China would like us and the diplomatic friends of Taiwan to switch to them, but for Palau it is not our choosing to decide the one China policy," he told Reuters in an interview in Palau's second biggest city, Meyuns.

Palau was adapting to the China pullback by focusing on higher spending visitors rather than mass tourism, which had taken a toll on the environment, said Remengesau.